Accounts Still in a Poor State - Auditor General
column’s review of the Auditor General’s Report on the Public
Accounts of the Ministries/Departments/Regions for the year 2000 began
last week in the form of a letter to Mr. Stanley Ming, MP of the opposition
PNC-R who has made loud noises about the poor state of the financial
management of the country. Many persons called me about the article noting
that it was funny. That certainly was not the intention – we should all
lament the manner in which taxes and borrowings are being managed at all
levels of government in the country. Today’s article includes extracts
from the Report and highlights some of the specific issues identified
therein. Next week’s concluding piece will look at debt management, the
question of governance and consider the prospects for improvement.
majority of Ministries/Departments/Regions violated Section 36 of the FAA
Act which requires all unspent balances as at 31 December of every year to
be surrendered to the Consolidated Fund. Cash books were kept open until 15
February 2001 and payments were backdated to 29 December 2000”.
from the Guyana Lotteries continued to be retained in a special bank account
to meet public expenditure without Parliamentary approval. Such proceeds are
public revenues which are required to be paid into the Consolidated Fund. As
at 31 December 2000, amounts totalling $1.454 billion were received as the
Government’s share of the Lotteries while payments totalling $654.239M
Ministry of Home Affairs transferred unspent balances totalling $17.561M on
three capital programmes to the Deposits Fund bank account, instead of the
Consolidated Fund, to be used in 2001. This is a serious breach of
Parliamentary approval to incur expenditure”
breaches in the Tender Board Regulations at the Guyana Defence Force were
again drawn to the attention of the Accounting Officer. These include the
absence of a system of competitive bidding and numerous instances of
contract splitting to avoid adjudication by the Central Tender Board. In
addition, the involvement of the Departmental Tender Board appeared to be
mere cosmetic to facilitate payments by the Sub-Treasury”.
In every case,
simply waived the requirements after the breaches had been committed.
were numerous breaches in the Tender Board Regulations at the Supreme Court
of Judicature. In particular, there was evidence of contract splitting to
avoid adjudication by the Departmental and Central Tender boards. In
addition, several instances of apparent misappropriation of funds were
uncovered in Georgetown and other magisterial districts due to the absence
of proper segregation of duties and failure to reconcile bank accounts.”
relation to the Ministry of Agriculture, the basis of the award of several
contracts adjudicated by the Central Tender Board could not be determined
because of the unavailability of the related files. A number of statutory
bodies in receipt of subventions from the Ministry were also significantly
in arrears in terms of financial reporting”.
the Ministry of Education, the main bank account was improperly used to make
advances, and at the time of reporting, 394 advanced totaling $40.387M
remained outstanding. There were also 494 payment vouchers valued at
$129.385M which were not presented for audit examination”.
relation to the Customs and Excise Department, eighty-three(83) Permits for
Immediate Delivery (PID’s) valued at $531.138M had not yet been perfected
at the time of the audit in August 2001.
In addition, a total of 1,069 cargo vessels arrived in port in 2000.
However, completed ship’s files in respect of only 213 were made available
for audit examination. The remainder were still at the various transit
sheds. These two issues are significant enough to affect the collectibility
of revenue. In relation to the Inland Revenue Department, there were 3,547
registered companies. However, only 691 submitted annual returns”.
relation to the Ministry of Public Works, a number of irregularities were
uncovered mainly in relation to building contracts. An official of the
Ministry was in collusion with certain contractors, and in a number of cases
there were overpayments on the contracts. These matters were referred to the
Police for investigation. The bridge at Mandella Avenue was also poorly
constructed, resulting in a final construction cost of approximately $25M,
including rectification costs”.
of Foreign Affairs
section of the Report runs from pages 97 to 161 and is as much an indictment
of the quality of the management of this country’s foreign relations as of
the neglect of the basic principles of financial management. The Report
refers to the case where a remittance of US$1,003 sent seven months earlier
and destined for transmission to the Consolidated Fund was “still being
held in an envelope in the Ministry’s safe” and the non-reconciliation
of several of the Missions’ bank accounts for extended periods.
foreign offices are all understaffed in many cases in critical positions.
The Auditor General’s request for information on the required staff levels
in some of the Consulates was not met, the Permanent Mission to the
all-important United nations was without an Ambassador at the time of the
visit, as was the Guyana Embassy in Brussels, there was little segregation
of duties, some of the premises (embassies as well as residences) and
furniture (e.g. Cuba) were in a state of disrepair, buildings rented for
substantial sums being unoccupied sometimes for years as in the case of
China for which rent of US$85,071 was paid for 2000 even though there was no
Ambassador since 1994! As usual, several of these issues were raised in
earlier reports which included recommendations of the diplomatic and
administrative staff of these offices. It seems that little or no action has
been taken while Parliament continues to finance this extra-ordinary state
Statement of Outstanding Loans and Advances made from the Consolidated Fund
shows $5.250 billion owing by Public Corporations including fifteen loans
granted to the Guyana Electricity Corporation and Linden Mining Enterprise.
The Report raises doubts about the recoverability of $3.668Bn.as well as the
recoverability of $439mn owed to the government by the former Guyana Airways
Corporation, $610Mn. by the Guyana Electricity Corporation and $500Mn. by
Mards Rice Milling Company Ltd.
included in the figure of $5.250 billion are amounts totalling $5.601M for
which there are no records and which appear to have have been outstanding
for a minimum of nineteen (19) years without evidence of any action being
taken to recover them!
Report comments that the Presidential Guard ($115Mn), Castellani
House($18Mn), and the Joint Intelligence Co-ordinating Agency ($5M) are
departments in the Office of the President and therefore ought not to be in
receipt of a subvention. The same comment has been made in respect of
several departments of the Ministry of Finance which despite repeated
critical comments by the Auditor General continue to receive subventions
The Report notes that
“the implications of having the operations of these units financed under
contributions to local organisations are two-fold. The first is that
Employment Costs and Other Charges are not categorised and shown in the
Appropriation Account in the traditional manner, thereby distorting the true
costs involved in respect of these two areas. Secondly, the present
arrangement facilitates the circumvention of the application of the
Government’s pay scales as employees of these units enjoy enhanced
compensation packages, instead of the approved Government rates.”
The Report identifies
several entities which are given subventions year after year despite their
failure to submit financial statements for audit. Most notably is the Guyana
National Energy Authority (GNEA) was established by the Energy Act No. 2 of
1981 and is subject to separate financial reporting and audit.
The last set of audited accounts was in respect of the year 1984, and
therefore the Authority was in sixteen (16) years in arrears in terms of
Report also notes that the Students Loan Programme at the University of
Guyana which commenced in 1994 had paid over some $2.533 billion were paid
over to the Loan Agency. The Report further notes that the Loan Agency is
not a separate legal entity and therefore there is no requirement to have
annual financial reporting and audit recommends that the Agency be given
statutory status as early as possible. It acknowledges however that since
2000, financial statements for the years 1994 to 1998 have been submitted
the sum of $235.333M voted
for providing special support for the most vulnerable groups in the country
$222.120M was expended principally through the Office of the President
$117.5M, the Ministry of Human Services ($41.1M), Ministry of Works
($24.8M), the Ministry of Agriculture ($10m). Of the amount spent through
the OP, rice and sugar farmers received $30.6M through the Ministry of
Agriculture which in turn paid over $20M to the Guyana Rice Development
Board. Not only were there no details of any payments made by the GRDB but
the question of the capacity of that organisation to manage such funds
arises since it would seem appropriate for the Ministry of Human Services/
SIMAP to manage such resources.